Mercy Corps has always been one of my favorite charities and is where we’ll be sending our year end charity donation.  I like contributing to Mercy Corps because I feel I’m a global citizen and they work in about 40 countries around the world where people are in dire need of assistance.

Their mission is to “alleviate suffering, poverty and oppression by helping people build secure, productive and just communities”.  Here are the approaches they take as described on their website:

• We enable community-led and market-driven recovery and development that empowers people to achieve the change they want to see.
• We find social innovations that address the world’s toughest problems.
• We inspire people in the developed world to engage on global challenges through education and advocacy.

Mercy Corps lists concrete examples of how donations are spent in the Topics section of their website.  Charity Navigator gives the organization four stars and shows that Mercy Corps spends 88.1% of donations on it’s programs.  I feel as though our donation is money well spent to help make the world better for people that really need it.

I have been somewhat disconnected from the financial blogosphere lately and I missed an important event, Poverty Awareness via Blog Action Day.

As the income gap continues to grow, wealth distribution in this country and around the world follows the idea of the 80/20 rule; a small percentage of the world has the majority of the wealth. I learned about many of the causes behind global poverty and potential solutions when I earned my international studies undergraduate degree. For a variety of reasons I ended up with a career in information technology instead of using what I had learned studying global politics and economics but the experience did open my eyes to the issues the world is facing.

The problems seem so daunting and overwhelming but there are many people working to solve them.  For example, Muhammad Yunus of Grameen Bank and Matt and Jessica Flannery of Kiva are working to put money in the hands of entrepreneurs in underdeveloped nations.  You can fund people in need directly through Kiva or you can donate to organizations, one of my favorite is Mercy Corp.

One simple thing that everyone can do is to visit The Hunger Site every day  and click the Give button.  Each click donates a portion of food, there is no cost to the visitor, the site is advertiser supported.

Here are some other thoughts and suggestions about global poverty that were written as part of Blog Action Day:

• Blog Action Day: Thoughts on Poverty
• Blog Action Day 2008 – Talking About Poverty.
• Learning to Give: What *I* Can Do to Fight Poverty
• War On Poverty (Blog Action Day)
• Matching Donations to Your Local Food Bank 
• Fight Poverty: Donate to Food Banks

Everyone can use their own skills to help address the issue, below is a video from Tina Fey, using her celebrity status to bring awareness to the topic of global hunger.  What skills can you use to make a difference?

Choosing a charity should be easy. You find a cause you support, and you send you in your check. However it is a little more complicated than simply picking a group for your donation.

Unfortunately, like everything else in this world, unscrupulous people are out there taking advantage of kind hearted individuals. For example, anybody can build a web page and set it up to take charitable donations. But, what you read is not necessarily so. While claiming to be a foundation for helping underprivileged kids, a person can rake in a ton of money-until they get caught. Yes. The scoundrels usually get caught, but will it be before they take advantage of your pocket?

I am in no way suggesting that people cease to give to those less fortunate. But, there are a couple of things you can do to make sure your money gets where you expect it to go.

First, check out the charity. Although it can profess to be a non-profit organization, it must be registered with the Federal government. If you can claim your gift as a tax deduction, it first needs to be recognized as such. If the charity is not registered with the IRS, be leery, unless it is a community fund-raiser for an individual in need. Then, you just have to trust the people collecting the monies to spend it wisely-which bring me to my second point.

Even government-recognized charitable organizations do not always spend your donation wisely. In fact, some administrator at the top may be getting rich at the expense of the needy. Before donating to a particular charity, ask to see how your donation dollar is spent. Does only 20 cents on the dollar actually get to the needy, and the rest go for a plethora of administration costs? (Personally, I would rather send my money directly, in that case).

Of course I understand that administration costs are necessary. But, why not 20 cents on the dollar go for expenses and 80 cents actually spent on the purpose for the charity. It can be done.

For example, as a former recipient of the Shriners, I know that people who donate to their burn centers and orthopedic hospitals can expect 100% of their money to go to the children needing medical attention. Shriners pay for their own expenses.

Recently, I saw an organization on the news that sends care packages to soldiers in Iraq. I am not being in any way political here. No matter how you stand on the war, there are people who are in harm’s way, missing their families, in order to do their duty. One mother thought to start a group. Now, there are 1000s, and the workers donate out of their own pockets as well. If money is an issue, they sit down and write millions of cards or help box goods.

In short, charities are a wonderful thing and kudos to you if you give. Simply be careful.

Do you know of other charities that will spend our money wisely?

Tina

“Loans that change lives” is Kiva’s tagline. Based upon the testimonials I have read, I believe they are keeping their word. So, how can they make such a claim?

Kiva is a peer to peer lender with a charitable mission. Unlike their counterparts who pay interest to the lenders, Kiva matches small business owners around the world with lenders who want to help them get the financial backing to succeed, without paying interest.

A more traditional social lending site will loan money for home renovations, education, loan consolidation and more. But, Kiva is concentrating on the poor who want to start a business and raise their standard of living. So, they do not loan money for building a new deck, consolidating credit card debt, purchasing a new car, or whatever. It is strictly for helping others help themselves. The people borrowing the capital don’t pay interest on the loan but they do have to pay the money back.

This idea of microcredit or microloans is somewhat modeled after the successful Grameen Bank which was initiated by the winner of the 2006 Nobel Peace Prize, Professor Muhammad Yunus. Kiva has a good example to follow in Grameen Bank and adds in their own approach by making great use of technology to connect developed country lenders and 3rd world borrowers. In a recent interview the CEO of Kiva, Matt Flannery, shared Kiva’s next goal. To connect people in developing world who are willing and able to lend capital with people looking to borrow money in the same country or region.

Kiva lenders can search through over 1556 pages of journals from men and women in Bolivia, Ecuador, Uganda, and other less fortunate nations to read how the money they lend is making a difference. Kiva is constantly adding new lenders and borrowers to the site so would-be entrepreneurs world-wide can succeed and start to climb out of poverty.

Altruistic at heart, I love this idea. So many people have more money than they know what to do with, yet they take it for granted. The borrowers at Kiva simply want to have the opportunity to have a decent life.

Check out www.kiva.org. Let me know what you think.

Tina

Do you ever wonder how much of the money you donate actually goes to the people that need it?

Overhead Costs
Companies that solicit contributions on behalf of charities get some type of payment for their services. A co-worker once told me that some of these organizations get a percentage of all the money they bring in. It seems it would provide a good incentive for the calling company, the more contributions they get, the more money they make. The problem is I’d like as much of the money I give to go directly where it’s needed instead of into the pockets of another company.

I asked this question of a phone rep working for a third party who was calling on behalf of Mercy Corps this week and never received a good answer. The longer the person on the other end of the line avoided answering the question, the more I realized it might be a mistake to pledge over the phone. I ended up saying I did not want to donate so his company wouldn’t take a cut. Instead I plan on taking my usual approach of donating directly to Mercy Corps.

Stewardship
Not only do I like the mission of Mercy Corps, I also like the fact that the organization works hard to keep overhead low so the money goes where it’s needed most. Mercy Corps includes a financial summary and balance sheet at the bottom of its annual report. They don’t have 2006 listed yet but in 2005, 11% of their spending was for administrative support.

I would like to see more detail provided here, for example how much do they pay third parties to fund raise for them or how much do they spend on mailers asking for donations. Since charitable organizations are making an effort to be as efficient as possible, I decided to come up with ways I could be more effective about donating.

How Can We Make Our Contributions More Effective?
1) Donate directly to cut out any middle men. I’ve donated via their website in the past but I should think about mailing in a personal check so they don’t have to pay credit card fees either.

2) Sign up for monthly giving. Often if you choose this option, the charitable organization will remove you from mail & call lists which will save them on promotional costs.

3) Donate what you pledge. If you speak with a representative of an organization and pledge a certain amount make sure you donate at least the amount you promised. From what I understand, some organizations allow for those pledges in the budget in some way. If many people give less than estimated it could cause problems with the planning the charity has done.

4) Use matching programs. Increasing the amount that is given is always more effective.

What are other ways we can be more effective with our donations?

We think we have it bad with credit card debt, crappy health insurance, and high gas prices but in reality we’re living a life others only dream about.

A Different World
My parents make bi-annual visits to Central America to provide health care for some of the poorest people in the Americas. They recently returned from a trip and relayed the sad yet hopeful story of a mother who had suffered a stroke and could no longer care for her family that lived in a tiny one-room home with a dirt floor high in the mountains.

With only a minor amount of teaching and practice the family learned how they could help her regain her mobility. Despite their meager household and medical obstacles, this family works together and continues on with life with the best attitude they can muster.

Take Nothing for Granted
After hearing many stories such as these it’s easy to realize that I often take many things in life for granted. It’s easy to get caught up in the rush of our society but remembering this mother and her family reminds me of how fortunate I really am. Thinking of their situation helps me stop and enjoy a quite moment with my son or marvel at a fresh spring day.

Making a Difference
Not only do these stories make me count my blessings, they also remind me of my responsibility as a global citizen to help out those less fortunate than I am. I’m ashamed to admit that other than annual cash contributions to Mercy Corp there isn’t much in my life that helps those in need. I have several ideas for changing that in 2007, I’ll let you know how they go.

I’ve had a lot of people asking if the purchase of girl scout cookies is a valid tax deduction. I consulted my tax friend and he pointed me the answer on the Girl Scouts website.

Basically, if you take posession of the cookies then you can’t write off the purchase because you received something in return for your money. If the Girl Scouts keep the cookies, I don’t know how often this happens, then the money you spend is tax-deductible. The information from the Girl Scout website is below.

Q: Is the purchase of Girl Scout Cookies tax-deductible?

A: No and Yes.

No
If the customer keeps the cookies. Individuals who buy Girl Scout Cookies and take the cookies home, or consume them, have purchased a product at a fair market value. For this reason, no part of the price of a box of Girl Scout Cookies used in this way is tax-deductible.

Yes
If the customer leaves the cookies with Girl Scouts. Many Girl Scouts ask customers to pay for one or more boxes of cookies for use in their community service project, for example, collecting for a food pantry. The customers not receiving any Girl Scout Cookies do not benefit directly from paying for them. Those individuals may treat the purchase price of the donated cookies as a charitable contribution.

Is it wrong to make a profit off of the Girl Scouts? I don’t think so. Read on before you disagree with me.

We Are Suckers
My wife and I don’t eat Girl Scout cookies but we buy them from the neighbor girls when they come knocking on our door. I think I inherited this trait from my mother. She’ll buy anything kids sell door to door just because they’re making the effort. So we spend money on the cookies to support the girls but they sit in our cupboard uneaten.

Cookies for the Highest Bidder
When I first started selling on eBay, I sold anything I could get my hands on. I ran across several boxes of Thin Mints sitting on the shelf and quickly put them up for auction. It was off-season for Girl Scout cookies so the law of demand had pushed their price on eBay over what we had paid for them.

Cookie Police
My excitement over watching the bid price climb was suddenly dashed one day when I received an email from a Girl Scout mother, chewing me up one side and down the other. I was an awful person from profiting off the Girl Scout organization and the hard work of those little girls. I responded to the scathing email in a courteous fashion but defending my actions.

After several such exchanges I realized I wasn’t going to get a pardon from the cookie police and left it at that. Of course I left the auction running and profited from shipping the cookies to a satisfied cookie fanatic somewhere on the East Coast.

Taking the Stand
I saw this season’s batch of Thin Mints on the shelf today and decided I needed to try my case in front of the world.

We help these girls out every year by spending money on something we don’t want. Is it wrong to resell them later on for a profit? It wasn’t Girl Scout cookie season when I sold them so I wasn’t stealing any business from the little girls. It seems like a win/win/win to me. The Girls Scouts sold a few boxes, I made a little money, and I delivered the cookies to a cookie junkie, craving a fix during the off season. I rest my case.

What do you, the jury, think?

The Pension Protection Act of 2006 gives the IRS the authority to disallow deductions of undocumented cash gifts to charities, including church offerings. If you put cash into the collection plate you can no longer write it off on your taxes.

Document Your Donations
Instead of putting dollars or coins into the offering plate, write a check instead. What’s the difference? The new law requires donations to be documented as this article describes:

“Individuals must show a receipt from the charity, a canceled check, or credit card statement to prove their donation. No tax deduction will be allowed if the taxpayer cannot provide any supporting documentation.”

Be a Good Steward
Many religions emphasis the importance of being a good steward with your money. If you can reduce your tax burden by documenting and writing off your donations, you’ll have more money left over to live your life and to donate to your church!

Wouldn’t it be nice if you could donate $100 to your favorite charity and have them get a check for $200?

Matching Gift Program
Some corporations have a matching gift program where they will match their employee’s charitable donation dollar for dollar. You can search MatchingGifts.com to see if your employer has such a program.

Free Money!
Once I discovered that my employer would match my gifts I felt guilty not utilizing it, I was basically throwing away free money for people that needed it!

Things to Consider
Pre-Approval
Corporations typically only match gifts to charities that are on their pre-approved list. Check with your Human Resources department to see if your charity is on their list.

Meet the Deadline
The donation must be made prior to the end of the calendar year. Your Human Resources department may have their own policies, be sure to check with them.

Follow the Rules
In order to be eligible for the matching gift through my company, I had to submit the donation check to my employer who then matched the money and forwared it on to the charity. If I donated directly to the charity they would not offer the match.

Act Now!
There are still a few more business days before the end of the year take advantage of your company’s matching gift program and double your donations!